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A PROPOSAL by the state Department of Community Health to spread a federal funding source even thinner among the state's hospitals could spell trouble for Georgia's rural care providers.

The DCH is considering opening up disbursements through the Disproportionate Share Hospital program to 33 more hospitals across the state. The money reimburses hospitals for care given to those who cannot pay for the service.

But because federal dollars are not expected to increase for the program, those hospitals currently receiving payments are likely to take a financial hit they can ill afford.

At Effingham Hospital, for instance, Chief Financial Officer Ed Brown said he expects to lose at least $30,000 compared to last fiscal year.

That's an 11.5 percent cut in the DSH payment, which totaled about $260,000 in Effingham. Community Health officials say cuts in future years could be more drastic.

While the DSH payment is only part of Effingham Hospital's $11.1 million total operating revenue, Mr. Brown said any cut will hurt.

"It's not like I have buckets of money, saying 'It's no big deal,'" Mr. Brown said. "Most hospitals right now are running at negative margins."

While Effingham Hospital's clinic and nursing home revenues were enough for the entire operation to make a profit, the hospital itself lost $77,000 last year.

For hospitals without such ancillary services, the federal reimbursements can be a make or break proposition.

That's because the nonpaying population includes more than the indigent. Sometimes patients who work - but have insurance policies with high deductibles - might not be able to pay the deductible cost.

Or if a person has a low-paying job, but they have a $20,000 operation and their insurance covers 80 percent, that person might not be able to cover their $4,000 bill.

The DSH payments help offset the expense of patients who can't or won't pay for care.

Considering the lack of a decent statewide level one trauma care network, placing a greater burden on rural hospitals already in shaky financial condition seems a recipe for disaster.

If those hospitals were to fold - or decide to close pricey emergency rooms - then the patients in the communities they serve will have to go to larger regional hospitals for care.

"If you're more than an hour's drive from a hospital, and you have a chest pain, you have a real problem," CFO Brown said.

Rural hospitals could find themselves in a similar position if the state continues to nibble away their funding.